Tilinpäätöstiedote 1.1.-31.12

Half-year report January 1–June 30, 2019 July 31, 2019

Tilinpäätöstiedote 1.1.-31.12. 2018 RAUTE CORPORATION – HALF-YEAR REPORT JANUARY 1–JUNE 30, 2019

• The Group’s net sales, EUR 78.3 million (MEUR 78.9), decreased 0.8% from the comparison period. Order intake was EUR 58 million (MEUR 96). • Operating profit was EUR 4.9 million (MEUR 5.9), down 16% from the comparison period. The result before taxes was EUR 5.1 million (MEUR 6.0). • Earnings per share were EUR 0.94 (EUR 1.09), and diluted earnings per share were EUR 0.94 (EUR 1.08). • Net sales for the second quarter were EUR 37.0 million and operating profit was EUR 2.3 million. Order intake was EUR 26 million. The order book at the end of the reporting period came to EUR 72 million (MEUR 127), a significant proportion of which is scheduled for 2020 and a smaller amount for 2021. • On June 25, 2019, Raute changed its guidance for 2019. Raute’s net sales for 2019 are expected to decrease and operating profit is expected to weaken from the comparison period.

TAPANI KIISKI, PRESIDENT AND CEO: UNCERTAINTY IN THE MARKETS

In the first six months of the year, we kept pace with last year in has been a planned effort in order to enable our future success. terms of net sales. We fell short of our targets, however, which was Some of the poor development of the result in relation to net sales caused by the scheduling of orders and the postponement of a few is explained by the extra costs of a few delayed projects. expected new orders. Our order book at the end of June, EUR 72 million, was still at a Uncertainty in our customers’ markets has increased, causing de- historically strong level, despite having decreased consistently for lays in the start-up of some projects that are in the negotiating over a year now. The scheduling of our order book now spans an phase. Many of our traditional customers are still paying off the exceptionally long period, giving us the opportunity to plan our investments they made in previous years. Demand right now is fo- operations well into the future. At the same time, we will also be cused on major new capacity projects, but also on services and mi- able to respond to the needs of our customers who demand quick nor improvements. Mid-sized projects account for an exceptionally deliveries and help them to seize the opportunities offered by their low share of offers and orders. The low number of these projects own markets. is causing fluctuations in our order intake. I consider the volume of our new orders in the second quarter, EUR 26 million, to be a Uncertainty in the markets caused delays in order intake and in reasonable achievement considering the market situation, and I the delivery of a few of our projects, as a result of which we had am pleased with the stable growth in the number of technology to downgrade the projections of our net sales and result for this service orders and net sales. year. We are nevertheless moving forward with determination and seeking new opportunities to help our customers in their business In terms of our operating profit, we are roughly a million euros be- in order to get as close as we can to last year’s record performance. hind last year’s corresponding figure. Some of this development

2 Half-year report January 1–June 30, 2019 July 31, 2019

SECOND QUARTER OF 2019 The situation in the global economy and the financial markets in technology services ranging from spare parts deliveries to regular early 2019 did not change considerably with respect to Raute. The maintenance and equipment modernizations, as well as consulting, Order intake and order book economic outlook became increasingly uncertain. A few of our cus- training, reconditioned machinery and digital services. The total order intake in the second quarter, EUR 26 million (MEUR tomers have informed us that they are experiencing a decline in 28), was at a good level, considering the market situation and bear- demand and prices. The increased market uncertainty was reflected in the volume of ing in mind that it did not include major individual new production new orders received by Raute. The order intake during the review capacity projects. Many of Raute’s established and traditional customers have in- period was, however, at a good level and amounted to EUR 58 mil- vested heavily during the past few years. As demand among this lion (MEUR 96). The most significant new order was for the delivery Technology services accounted for EUR 15 million (MEUR 13) of the traditional customer base dwindles, the demand for our technolo- of plywood mill machinery to Russia valued at more than EUR 12 order intake. gy continues to shift towards new and different types of customer million. Apart from that, Raute’s new orders consisted of smaller accounts. A few of the orders we have received are concrete proof contracts. The order book declined during the second quarter by EUR 12 mil- of this shift. lion, but nevertheless ended the period at a strong EUR 72 million Of new orders, 45 percent came from Russia (15%), 21 percent (MEUR 127). Demand for wood products technology and technology services from North America (10%), 16 percent from Europe (51%), 15 per- Although investment activity among Raute’s customers has de- cent from South America (2%), and 3 percent from Asia-Pacific Net sales creased from what it was in recent years, it remains at least at a (22%). Sometimes even strong fluctuations in the distribution of Second-quarter net sales amounted to EUR 37.0 million (MEUR reasonable level. Enquiry activity for new capacity projects and new orders between the various market areas are typical for proj- 43.7). Technology services accounted for 51 percent (30%) of the larger projects involving replacement and efficiency-boosting in- ect-focused business. The second quarter accounted for EUR 26 total net sales and amounted to EUR 19 million (MEUR 13). vestments has remained at a good level, and contracts are being million of the order intake. actively negotiated. Result and profitability Order intake in technology services amounted to EUR 29 million Operating profit in the second quarter was EUR 2.3 million positive Demand remains the strongest in industrialized market areas, es- (MEUR 28), increasing 5 percent on the comparison period. (MEUR 3.2 positive) and accounted for 6.3 percent (7.2%) of net pecially Russia. In the emerging markets of Asia, China included, sales. The result was EUR 1.9 million positive (MEUR 2.4 positive), and South America, demand has not been as strong, but it has been The order book declined during the second quarter by EUR 12 mil- and earnings per share were EUR +0.44 (EUR +0.56). brisker in recent months. There is growing interest in Raute’s offer- lion. The order book at the end of the reporting period was strong, ing in these markets, which presents opportunities to obtain new however, at EUR 72 million (MEUR 127). A large part of the order RAUTE CORPORATION – HALF-YEAR REPORT customers. book has already been scheduled for 2020 and a small portion for JANUARY 1–JUNE 30, 2019 2021. Demand for maintenance and spare parts services remained at a BUSINESS ENVIRONMENT good level, which is an indication of the good capacity utilization COMPETITIVE POSITION rates of Raute’s customers’ production plants. Raute’s competitive position has remained unchanged and is Market situation in customer industries strong. Raute’s solutions help customers in securing their delivery Raute’s customers in the plywood and LVL (Laminated Veneer Lum- ORDER INTAKE AND ORDER BOOK and service capabilities throughout the life cycle of the production ber) industries are engaged in the manufacture of wood products Raute serves the wood products industry with a full-service con- process or a part thereof. In such investments, the supplier’s over- used in investment projects and are thus highly affected by fluctu- cept that is based on technology solutions covering the custom- all expertise and extensive and diverse technology offering play a ations in construction, housing-related consumption, international er’s entire production process and services throughout their life key role. The competitive edge provided by Raute plays a major trade and transportation. We estimate that the growth trend in cycle. Raute’s business consists of project deliveries and technolo- role when customers select their cooperation partners. Raute’s wood construction will create demand for our customers and in- gy services. Project deliveries encompass projects from individual strong financial position and long-term dedication to serving se- directly for Raute, and will also strengthen growth opportunities machine or production line deliveries to deliveries of all the ma- lected customer industries also enhance its credibility and improve in the long term. chines and equipment belonging to a mill’s production process. its competitive position as a company that carries out long-term Additionally, Raute’s full-service concept includes comprehensive investment projects.

3 NET SALES Interest-bearing liabilities amounted to EUR 8.1 million (MEUR 1.3) Capital expenditure during the period came to EUR 1.3 million Net sales for the reporting period totaled EUR 78.3 million (MEUR at the end of the reporting period. The increase is entirely due to (MEUR 2.2) and accounted for 1.7 percent (2.7%) of net sales. Gross 78.9), down 0.8 percent from the comparison period. the recognition of right-of-use assets under IFRS 16. capital expenditure during the reporting period, before non-recurring insurance settlements related to investments, amounted Of the total net sales for the reporting period, Europe accounted The parent company Raute Corporation has a EUR 10 million com- to EUR 1.9 million. Gross investments include EUR 0.8 million that for 44 percent (45%), Russia for 26 percent (30%), North Amer- mercial paper program, which allows the company to issue com- was recorded during the reporting period and which is part of a ica for 16 percent (18%), South America for 8 percent (4%), and mercial papers maturing in less than one year. replacement investment, the total amount of which is EUR 1.4 Asia-Pacific for 6 percent (3%). million. The company has received non-recurring insurance settle- The parent company Raute Corporation is prepared for future ments for this investment. Technology services accounted for 43 percent (30%) of the Group’s working capital needs and has long-term credit facility agreements total net sales and amounted to EUR 33 million (MEUR 24). with four Nordic banks totaling EUR 23.0 million. The main cove- PERSONNEL nants of the credit facilities are an equity ratio of >30% and gearing At the end of the reporting period, the Group’s personnel num- RESULT AND PROFITABILITY of <100%. Of the credit facilities, EUR 22.6 million remained unused bered 810 (778). Group companies outside Finland accounted for During the period under review, operating profit was EUR 4.9 mil- at the end of the reporting period. 33 percent (32%) of employees. lion positive (MEUR 5.9 positive) and accounted for 6.3 percent of net sales (7.5%). The decline in profitability can be attributed to in- EVENTS DURING THE REPORTING PERIOD Converted to full-time employees (“effective headcount”), the av- vestments in future operations and the extra costs of a few delayed Raute Corporation published stock exchange releases on the fol- erage number of employees was 758 (705) during the reporting projects. lowing events concerning the review period: period. The increase in personnel is the result of a strategic deci- 2 January 2019 Third plan for Raute’s top management remunera- sion to increase the company’s resources in order to respond to The result before taxes for the reporting period was EUR 5.1 million tion system, LTI 2019-2021, takes off growing volumes. The change partly reduces the share of high-cost positive (MEUR 6.0 positive). The result for the reporting period 15 January 2019 Positive profit warning: Raute Corporation’s 2018 subcontracting, while at the same time ensuring that expertise was EUR 4.0 million positive (MEUR 4.6 positive). Earnings per share net sales and operating profit will increase clearly compared to within the company is maintained and developed. (undiluted) were EUR 0.94 (EUR 1.09). 2017 28 March 2019 Raute received orders worth over EUR 12 million SHARES CASH FLOW AND BALANCE SHEET to Russia The number of Raute Corporation’s shares at the end of the re- The Group’s financial position remained good. At the end of the 2 April 2019 Decisions of Raute Corporation’s Annual General porting period totaled 4,263,194, of which 991,161 were series K reporting period, gearing was -43 percent (-66%). Gearing adjust- Meeting 2019 shares (ordinary share, 20 votes/share) and 3,272,033 were series ed without the lease assets arising from the adoption of the IFRS 25 June 2019 Raute’s profit outlook for 2019 weakened. A shares (1 vote/share). Series K and A shares confer equal rights to 16 standard was -58 percent. At the end of the reporting period, dividends and company assets. the equity ratio was 63 percent (61%). The equity ratio, excluding RESEARCH AND DEVELOPMENT COSTS AND CAPITAL the impacts of the adoption of the IFRS 16 standard, was 70 per- EXPENDITURE Series K shares can be converted to series A shares under the terms cent. Fluctuations in balance sheet working capital items and the Raute is a leading technology supplier for the plywood and LVL in- set out in section 3 of the Articles of Association. If an ordinary key figures based on them are due to differences in the timing of dustries and focuses strongly on the development of increasingly share is transferred to a new owner who has not previously held customer payments and the cost accumulation from project deliv- efficient, productive, safe and environmentally friendly manufac- series K shares, the new owner must notify the Board of Directors eries, which is typical of the project business. turing technology and supporting measurement and machine vi- of this in writing and without delay. Other holders of series K shares sion applications. Opportunities provided by digitalization are also have the right to redeem the share under the terms specified in The Group’s cash and cash equivalents amounted to EUR 27.3 mil- an essential part of R&D activities. Article 4 of the Articles of Association. lion (MEUR 27.1) at the end of the reporting period. Operating cash flow was EUR 21.8 million positive (MEUR 3.2 positive). Cash flow Research and development costs in the reporting period amount- Raute Corporation’s series A shares are listed on Nasdaq Helsinki from investment activities was EUR 1.4 million negative (MEUR 1.3 ed to EUR 1.8 million (MEUR 1.7), representing 2.4 percent of net Ltd. The trading code is RAUTE. negative). Cash flow from financing activities was EUR 6.5 million sales (2.2%). negative (MEUR 5.5 negative), including dividend payments of EUR The company’s market capitalization at the end of the reporting 6.0 million. period was EUR 96.8 million (MEUR 135.1), with series K shares val-

4 Half-year report January 1–June 30, 2019 July 31, 2019 ued at the closing price of series A shares on the final closing date Arja Hakala, Group Vice President, Strategy – business develop- Raute Corporation’s Board of Directors has an Appointments June 28, 2019, i.e. EUR 22.70 (EUR 31.70). ment Committee. The Appointments Committee is chaired by Ms. Lau- Marko Hjelt, Group Vice President, Human Resources – human re- ra Raitio and its members are Mr. Mika Mustakallio and Mr. Pekka REMUNERATION sources and competence development Suominen. The Audit Committee’s tasks are handled by the Board The Group has performance-based bonus systems in place that Mika Hyysti, Group Vice President, Technology – technology, prod- of Directors. cover the entire personnel. ucts and R&D Tarja Järvinen, Group Vice President, CFO – finance and adminis- EVENTS AFTER THE REPORTING PERIOD Share-based incentive plans tration No significant events took place after the reporting period. The Group has valid long-term share-based incentive plans based Timo Kangas, Group Vice President, EMEA – market area EMEA on performance. Petri Strengell, Group Vice President, Supply Chain – sourcing and BUSINESS RISKS production. Risks in the near term continue to be driven by the uncertainty The company decided to launch a new performance-based, share- relating to the global economic situation and the development of value-based, long-term incentive plan, LTI Plan 2019-2021, on Jan- ANNUAL GENERAL MEETING 2019 the financial markets, as well as by international political instability. uary 2, 2019. Raute Corporation’s Annual General Meeting was held on April 2, During the reporting period, there were no essential changes in the 2019. More detailed information on the decisions of the Annual business risks described in the 2018 Board of Directors’ Report and The terms and conditions of the incentive plans are available on the General Meeting can be found in the stock exchange release issued Financial Statements. company’s website. More detailed and up-to-date information is on April 2, 2019. presented in the Remuneration Statement on the company’s web- The most significant risks for Raute in the near term are related to site. DISTRIBUTION OF PROFIT FOR THE 2018 FINANCIAL YEAR the development of the market situation and to the completion of The Annual General Meeting held on April 2, 2019 decided to pay major mill-scale projects that are in the implementation phase, in SHAREHOLDERS a dividend of EUR 1.40 per share for the financial year 2018. The accordance with the schedule determined in the contract terms. The number of shareholders totaled 5,046 at the beginning of the total amount of dividends is EUR 6.0 million, with series A shares year and 5,535 at the end of the reporting period. Series K shares accounting for EUR 4,580,846.20 and series K shares for EUR OUTLOOK FOR 2019 were held by 54 private individuals (55) at the end of the report- 1,387,625.40. The dividend payment date was April 11, 2019. On June 25, 2019, Raute changed its guidance for 2019 concerning period. Nominee-registered shares accounted for 3.4 percent ing net sales and operating profit, estimating that the company’s (6.7%) of shares. The company did not receive any flagging notifica- BOARD OF DIRECTORS AND BOARD COMMITTEES net sales will decrease and operating profit will weaken in 2019 tions during the reporting period. At the Annual General Meeting held on April 2, 2019, Ms. Laura compared to the record figures of the previous year. The revised Raitio was elected Chair of the Board, Mr. Mika Mustakallio was guidance was based on scheduling delays concerning a few proj- The Board of Directors, the President and CEO as well as the Exec- elected Vice-Chair, and Mr. Joni Bask, Mr. Ari Harmaala, Mr. Pekka ects that were in the implementation phase, as well as the related utive Board held altogether 259,558 company shares, equaling 6.1 Suominen, and Mr. Patrick von Essen were elected as Board mem- costs, and to the postponement from previous estimates of a few percent (6.1%) of the company shares and 11.6 percent (11.6%) of bers. The Board of Directors’ term of office will continue until the major new orders that are in the negotiation phase. the votes at the end of the reporting period. 2020 Annual General Meeting. The company’s current situation and outlook for the rest of the CORPORATE GOVERNANCE Based on the evaluation of independence by the Board of Direc- year give no cause to change the guidance issued on June 25, 2019. As of January 1, 2016, Raute Corporation complies with the Finnish tors, Chair of the Board Ms. Laura Raitio and members Mr. Joni Raute’s net sales will decrease and operating profit will weaken in Corporate Governance Code 2015 for listed companies issued by Bask, Mr. Ari Harmaala, Mr. Pekka Suominen and Mr. Patrick von 2019 compared to 2018. the Securities Market Association on October 1, 2015. Essen are independent of the company. Vice Chair of the Board of Directors Mr. Mika Mustakallio is not estimated to be indepen- EXECUTIVE BOARD dent of the company, as he has served on the Board of Directors Raute Group’s Executive Board and the members’ areas of respon- for more than ten years. Chair of the Board Laura Raitio and two sibility: Board members, Mr. Ari Harmaala and Mr. Patrick von Essen, are Tapani Kiiski, President and CEO, Chairman – sales, technology ser- independent of major shareholders. vices

5 Consolidated statement of income

Raute Corporation’s Board of Directors has approved this Half-year financial report for January 1 – June 30 2019 to be published.

The figures for the financial year 2018 presented in the figures section of the Half-year financial report have been audited. The presented interim financial report figures have not been audited.

CONSOLIDATED STATEMENT OF INCOME CONSOLIDATED STATEMENT OF INCOME 1.4.– 1.4.– 1.1.– 1.1.– 1.1.– 1.4.– 1.4.– 1.1.– 1.1.– 1.1.– EUR 1 000 30.6.2019 30.6.2018 30.6.2019 30.6.2018 31.12.2018 EUR 1 000 30.6.2019 30.6.2018 30.6.2019 30.6.2018 31.12.2018

NET SALES 36 981 43 667 78 291 78 939 180 993 PROFIT FOR THE PERIOD 1 887 2 372 4 022 4 628 11 836

Change in inventories of finished goods and work in progress -1 818 1 574 -928 2 803 3 069 Other comprehensive income items: Other operating income 109 293 221 358 692 Items that may be subsequently reclassified to profit or loss Materials and services -16 900 -103 781 -26 271 -40 063 -44 445 Changes in the fair value of Employee benefits expense -11 152 -11 568 -22 870 -22 814 -46 944 available-for sale investments - 246 - 246 - Depreciation and amortization -938 -635 -1 878 -1 285 -2 487 Hedge accounting 65 -79 213 -39 -73 Impairments -96 - -145 - -38 Exchange differences on Other operating expenses -3 848 -3 903 -7 689 -7 646 -16 582 translating foreign operations -2 -4 109 11 356 Total operating expenses -32 933 -42 377 -72 645 -76 190 -169 832 Income taxes related to these items -21 -3 -21 -31 10 OPERATING PROFIT 2 338 3 156 4 938 5 910 14 922 Comprehensive income items % of net sales 6,3 7,2 6,3 7,5 8,2 for the period, net of tax 40 160 301 187 293 Financial income 109 72 315 296 346 Financial expenses -136 -107 -194 -172 -356 COMPREHENSIVE PROFIT FOR THE PERIOD 1 929 2 532 4 324 4 814 12 129 Financial expenses, net -27 -36 121 125 -10 Comprehensive profit for the PROFIT BEFORE TAX 2 311 3 121 5 058 6 035 14 912 period ttributable to % of net sales 6,3 7,1 6,5 7,6 8,2 Equity holders of the Parent Income taxes -424 -748 -1 036 -1 407 -3 076 company 1 929 2 532 4 324 4 814 12 129 PROFIT FOR THE PERIOD 1 887 2 372 4 022 4 628 11 836 % of net sales 5,1 5,4 5,1 5,9 6,5 Shares, 1 000 pcs Adjusted average number of Profit for the period attributable shares 4 263 4 263 4 263 4 256 4 260 to Adjusted average number of Equity holders of the Parent shares diluted 4 299 4 284 4 299 4 276 4 290 company 1 887 2 372 4 022 4 628 11 836

Earnings per share for profit attributable to equity holders of the Parent company, EUR Undiluted earnings per share 0,44 0,56 0,94 1,09 2,78 Diluted earnings per share 0,44 0,55 0,94 1,08 2,76

6 Consolidated balance sheet Half-year report January 1–June 30, 2019 July 31, 2019

CONSOLIDATED BALANCE SHEET CONSOLIDATED BALANCE SHEET

EUR 1 000 30.6.2019 30.6.2018 31.12.2018 EUR 1 000 30.6.2019 30.6.2018 31.12.2018

ASSETS EQUITY AND LIABILITIES

Non-current assets Equity attributable to equity holders of Goodwill 1 035 1 059 1 035 the Parent company Other intangible assets 2 440 2 558 2 500 Share capital 8 256 8 256 8 256 Property, plant and equipment 11 662 10 681 11 612 Fair value reserve and other reserves 7 487 7 684 7 164 Right-of-use assets 6 828 - - Exchange differences 1 125 670 1 015 Other financial assets 1 185 1 169 1 185 Retained earnings 24 106 17 876 18 239 Deferred tax assets 27 20 35 Profit for the period 4 022 4 628 11 836 Total non-current assets 23 177 15 488 16 368 Total equity 44 995 39 114 46 509

Current assets Non-current liabilities Inventories 13 059 14 652 14 383 Provisions 276 553 605 Accounts receivables and other receivables 27 883 30 715 52 256 Non-current interest-bearing liabilities 5 446 - - Income tax receivable 509 - - Deferred tax liability - 29 - Cash and cash equivalents 27 350 27 132 13 375 Total non-current liabilities 5 722 582 605 Total current assets 68 800 72 500 80 014 Current liabilities TOTAL ASSETS 91 977 87 988 96 382 Provisions 1 801 1 633 1 595 Current interest-bearing liabilities 2 613 1 269 1 079 Current advance payments received 20 892 24 356 21 006 Income tax liability 287 280 992 Trade payables and other liabilities 15 667 20 754 24 595 Total current liabilities 41 260 48 292 49 268

Total liabilities 46 982 48 874 49 872

TOTAL EQUITY AND LIABILITIES 91 977 87 988 96 382

7 Consolidated statement of cash flows

CONSOLIDATED STATEMENT OF CASH FLOWS EUR 1 000 1.1.–30.6.2019 1.1.–30.6.2018 1.1.–31.12.2018

CASH FLOW FROM OPERATING ACTIVITIES Proceeds from customers 100 651 82 912 164 339 Other operating income 121 354 611 Payments to suppliers and employees -77 029 -78 423 -170 127 Cash flow before financial items and taxes 23 743 4 843 -5 177 Interest paid from operating activities -37 -69 -119 Dividends received from operating activities 293 249 249 Interest received from operating activities 14 9 20 Other financing items from operating activities 60 -244 48 Income taxes paid from operating activities -2 231 -1 597 -2 584 NET CASH FLOW FROM OPERATING ACTIVITIES (A) 21 842 3 191 -7 562

CASH FLOW FROM INVESTING ACTIVITIES Purchase of property, plant and equipment and intangible assets -1 453 -1 488 -3 612 Business transaction - - -769 Proceeds from sale of property, plant and equipment and intangible assets 54 156 230 Proceeds from sale of investments - - - NET CASH FLOW FROM INVESTING ACTIVITIES (B) -1 400 -1 331 -4 151

CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of share capital - 59 59 Proceeds from current borrowings 148 - 1 093 Repayments of current borrowings - -192 -1 427 Repayments of lease liabilities -685 - - Dividends paid -5 968 -5 320 -5 320 NET CASH FLOW FROM FINANCING ACTIVITIES (C) -6 506 -5 454 -5 595

NET CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) 13 936 -3 594 -17 309 increase (+)/decrease (-)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD* 13 375 30 724 30 724 NET CHANGE IN CASH AND CASH EQUIVALENTS 13 936 -3 594 -17 309 EFFECTS OF EXCHANGE RATE CHANGES ON CASH 39 3 -40 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD* 27 350 27 132 13 375

CASH AND CASH EQUIVALENTS IN THE BALANCE SHEET AT THE END OF THE PERIOD* Cash and cash equivalents 27 350 27 132 13 375 TOTAL 27 350 27 132 13 375

*Cash and cash equivalents comprise cash and bank receivables, which will be due within the following three months’ period.

8 Consolidated statement of changes in shareholders’ equity Half-year report January 1–June 30, 2019 July 31, 2019

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY Invested To the Share non-restricted Other Exchange Retained equity holders of EUR 1 000 capital equity reserve reserves differences earnings the Parent company TOTAL EQUITY EQUITY at Jan. 1, 2019 8 256 5 711 1 453 1 015 30 075 46 509 46 509 Comprehensive profit for the period Profit for the period - - - - 4 022 4 022 4 022 Other comprehensive income items: Hedging reserve - - 213 - - 213 213 Exchange differences on translating foreign operations - - - 109 - 109 109 Income taxes related to these items - - -21 - - -21 -21 Total comprehensive profit for the period - - 193 109 4 022 4 324 4 324 Transactions with equity holders Share-options exercised ------Equity-settled share-based transactions - - 130 - - 130 130 Dividends - - - - -5 968 -5 968 -5 968 Total transactions with equity holders 0 0 130 0 -5 968 -5 839 -5 839 EQUITY at June 30, 2019 8 256 5 711 1 776 1 125 28 129 44 995 44 995 COMPARISON PERIOD, RESTATED Invested To the Share non-restricted Other Exchange Retained equity holders of EUR 1 000 capital equity reserve reserves differences earnings the Parent company TOTAL EQUITY

EQUITY at Jan. 1, 2018 8 256 5 652 1 504 659 23 623 39 694 39 694 Changes in accounting principles, IFRS 15 - - - - -322 -322 -322 Changes in accounting principles, IFRS 9 - - - - -104 -104 -104 Changes in accounting principles, IFRS 2 - - 117 - - 117 117 EQUITY at Jan. 1, 2018, RESTATED 8 256 5 652 1 621 659 23 197 39 385 39 385 Comprehensive profit for the period Profit for the period - - - - 4 628 4 628 4 628 Other comprehensive income items: Changes in the fair value of available-for sale investments - - 246 - - 246 246 Hedging reserve - - -39 - - -39 -39 Exchange differences on translating foreign operations - - - 11 - 11 11 Income taxes related to these items - - -31 - - -31 -31 Total comprehensive profit for the period - - 176 11 4 628 4 814 4 814 Transactions with equity holders Share-options exercised - 59 - - - 59 59 Equity-settled share-based transactions - - 177 - - 177 177 Dividends - - - - -5 320 -5 320 -5 320 Total transactions with equity holders 0 59 177 0 -5 320 -5 085 -5 085 EQUITY at June 30, 2018 8 256 5 711 1 973 670 22 505 39 114 39 114 9 Notes

NOTES TO THE HALF-YEAR FINANCIAL REPORT

General information Basis of preparation Raute Group is a globally operating technology and service com- Raute Corporation’s Half-year financial report for January 1 – June pany serving the wood products industry, with core competence 30, 2019 has been prepared in accordance with standard IAS 34 in selected wood products manufacturing processes. Raute’s cus- Interim Financial Reporting. tomers are companies operating in the wood products industry that manufacture veneer, plywood, LVL and sawn timber. The Half-year financial report does not contain full notes and other information presented in the financial statements, and therefore Raute’s full-service concept is based on product life-cycle manage- the Half-year financial report should be read in conjunction with ment and includes project deliveries and technology services. Ra- the Financial statements published for 2018. ute’s technology offering covers machinery and equipment for the customer’s entire production process. In addition to a broad range Raute Corporation’s Half-year financial report for January 1 – June of machines and equipment, Raute’s solutions cover technology 30, 2019 has been prepared in accordance with the International services ranging from spare parts deliveries to regular mainte- Financial Reporting Standards, IFRS, accepted for application in the nance and equipment modernizations as well as consulting, train- European Union, including related interpretations. The Half-year ing, reconditioned machinery and digital services. financial report has been drawn up according to the same accounting principles as in the consolidated financial statements for 2018, Raute Group’s Parent company, Raute Corporation, is a Finnish except for the adoption of IFRIC interpretations and a new stan- public limited liability company established in accordance with dard IFRS 16 Leases, effective as of January 1, 2019. Finnish law (Business ID FI01490726). Its series A shares are quot- ed on Nasdaq Helsinki Ltd, under Industrials. Raute Corporation is When preparing the Half-year financial report in compliance with domiciled in Lahti. The address of its registered office is Rautetie International Financial Reporting Standards, the company- man 2, FI-15550 Nastola, and its postal address is P.O. Box 69, FI-15551 agement has made estimates and assumptions. In addition, the Nastola. management has exercised its judgment in selecting and applying the accounting policies. The forward-looking estimates and All of the figures presented in the Interim financial report are in assumptions have been based on management’s best knowledge thousand euro, unless otherwise stated. Due to the rounding of at the reporting date, and they comprise risks and uncertainties, the figures in the financial statement tables, the sums of figures therefore actual results may differ from these estimates. may deviate from the sum total presented in the table. Figures in parentheses refer to the corresponding figures in the comparison period.

10 Half-year report January 1–June 30, 2019 July 31, 2019

Net sales Raute serves the wood products industry with a full-service concept based on service that encompass- EUR 1 000 30.6.2019 30.6.2018 31.12.2018 es the entire life cycle of the delivered equipment. Raute’s business consists of project deliveries and technology services. Project deliveries encompass projects from individual machine or production line deliveries to deliveries of all the machines and equipment belonging to a mill’s production process. Specification of net sales Performance obligations to be satisfied over 58 902 65 324 149 460 Additionally, Raute’s full-service concept includes comprehensive technology services ranging from time spare parts deliveries to regular maintenance and equipment modernizations, as well as consulting, Performance obligations to be satisfied at a training and reconditioned machinery. Project deliveries and modernizations related to technology ser- point in time 19 389 13 615 31 533 vices include both product and service sales, making it impossible to give a reliable presentation of the TOTAL 78 291 78 939 180 993 breakdown of the Group’s net sales into purely product and service sales. Project revenues entered as income from 1.1.– 1.1.– 1.1.– performance obligations to be satisfied over EUR 1 000 30.6.2019 % 30.6.2018 % 31.12.2018 % time currently undelivered 180 450 160 140 202 848

Net sales by market area Amount of performance obligations to be EMEA (Europe and Africa) 34 135 44 35 302 45 76 968 43 satisfied over time not yet entered as income (order book) 64 724 121 776 88 037 CIS (Russia) 20 470 26 23 521 30 47 757 26 NAM (North America) 12 509 16 14 545 18 32 168 18 Balance sheet items of undelivered projects LAM (South America) 6 473 8 2 813 4 5 662 3 Projects in which the value by percentage of APAC (Asia-Pacific) 4 704 6 2 757 3 18 438 10 completion exceeds advance payments invoiced TOTAL 78 291 100 78 939 100 180 993 100 - aggregate amount of costs incurred and recognized profits less recognized losses 118 867 108 971 140 536 Finland accounted for 15 percent (11 %) of net sales. - advance payments received 100 485 89 247 99 313 Current customer contract assets 18 382 19 723 41 223

Projects in which advance payments invoiced exceed the value be percentage of completion - aggregate amount of costs incurred and recognized profits less recognized losses 60 817 50 998 60 676 - advance payments received 77 262 72 165 78 602 Current customer contract liabilities 16 445 21 166 17 926

Advance payments included in current liabilities in the balance sheet Current customer contract assets 16 445 21 166 17 926 Current customer contract liabilities 4 447 3 190 3 080 Total 20 892 24 356 21 006

Advance payments of the customer contracts included in inventories in the balance sheet Advance payments paid 390 1 145 1 017 Total 390 1 145 1 017

11 EUR 1 000 30.6.2019 30.6.2018 31.12.2018 EUR 1 000 30.6.2019 30.6.2018 31.12.2018

Research and development costs Property, plant and equipment Research and development costs for the period -1 846 -1 704 -3 735 Acquisition cost at the beginning of the period 53 391 50 134 50 134 Amortization of previously capitalized development Exchange rate differences 429 -173 -316 costs - -94 -125 Development costs recognized as an asset in the Additions 1 022 1 947 3 916 balance sheet 145 151 275 Disposals -70 -146 -225 Research and development costs recognized as an Reclassification between items 2 -115 -119 expense before impairments for the period -1 701 -1 646 -3 585 Acquisition cost at the end of the period 54 775 51 648 53 391 Impairments of capitalized development costs -145 - -38 Research and development costs recognized as an Accumulated depreciation and amortization at the expense for the period -1 846 -1 646 -3 623 beginning of the period -41 778 -40 186 -40 186 Exchange rate differences -380 179 294 EUR 1 000 30.6.2019 30.6.2018 31.12.2018 Accumulated depreciation and amortization of disposals and reclassifications 15 0 4 Other intangible assets Depreciation and amortization for the period -969 -959 -1 890 Acquisition cost at the beginning of the period 15 384 14 799 14 799 Accumulated depreciation and amortization at the end of the period -43 113 -40 966 -41 778 Exchange rate differences 2 4 -1 Additions 302 221 468 Book value of Property, plant and equipment, Disposals - - - at the beginning of the period 11 612 9 948 9 948 Reclassification between items -5 772 115 119 Book value of Property, plant and equipment, Acquisition cost at the end of the period 9 916 15 139 15 384 at the end of the period 11 662 10 681 11 612

Accumulated depreciation and amortization at the 1.1.– 1.1.– 1.1.– beginning of the period -12 884 -12 250 -12 250 EUR 1 000 30.6.2019 30.6.2018 31.12.2018 Exchange rate differences -1 -3 1 Accumulated depreciation and amortization of Right-of-use assets disposals and reclassifications 5 772 - - Book value, at the beginning of the period 7 391 - - Impairments -145 - -38 Exchange rate differences 128 - - Depreciation and amortization for the period -218 -326 -597 Increases - - - Accumulated depreciation and amortization Depreciation for the period -691 - - at the end of the period -7 476 -12 580 -12 884 Book value, at the end of the period 6 828 - -

Book value of Other intangible assets, at the beginning of the period 2 500 2 548 2 548 Raute Group has adopted the standard IFRS 16 Leases as of January 1, 2019. The transition has been adopted by applying the simplified approach and comparative information has not been Book value of Other intangible assets, at the end of the period 2 440 2 558 2 500 restated. Detailed information on the adoption of the IFRS standard has been presented in the Interim financial report published on May 3, 2019.

12 Half-year report January 1–June 30, 2019 July 31, 2019

Financial assets EUR 1 000 30.6.2019 30.6.2018 31.12.2018 At the end of the period June 30, 2019, the fair value of the financial assets categorized at fair value hierarchy level 3 was EUR 1,185 thousand. The item includes the investments in unquoted shares which have been classified as financial assets at fair value through other comprehensive income. Derivative Pledged assets and contingent liabilities contracts have been classified as financial assets and liabilities at fair value through profit or loss. The On behalf of the Parent company fair value of these derivative contracts is based on the price available from the market data, but in- Business mortgages - 8 525 - struments are not traded in an active market. At the end of the period June 30, 2019, the fair value of the derivative contracts classified as financial assets was EUR 118 thousand and the fair value of the derivative contracts classified as financial liability EUR 106 thousand. Mortgage agreements on behalf of subsidiaries Financial loans 1 232 1 269 1 079 EUR 1 000 30.6.2019 30.6.2018 31.12.2018 Other obligations 366 439 116 Business mortgages - 1 708 - Financial liabilities Other credit guarantee arrangements - - 1 195 Non-current interest-bearing liabilities Lease liabilities 5 446 - - Commercial bank guarantees on behalf of the 6 211 33 895 25 925 TOTAL 5 446 - - Parent company and subsidiaries

Current interest-bearing liabilities Off-balance sheet leases Partial payments of financial loans 1 232 1 269 1 079 Rental liabilities maturing within one year 90 1 430 1 513 Lease liabilities 1 381 - - Rental liabilities maturing in one to five years 58 3 197 2 629 1 269 1 079 TOTAL 2 613 Rental liabilities maturing later - 126 - Total 147 4 754 4 143 EUR 1 000 30.6.2019 30.6.2018 31.12.2018 Share-based payments Derivatives An expense of EUR 130 thousand was recognized for the share rewards to the income statement Nominal values of forward contracts in foreign during the reporting period. currency Economic hedging No share rewards have been paid based on the long-term performance share-based incentive plan 2014–2018 for the Group’s senior management during the financial period. - Related to financing 791 86 961 - Related to the hedging of net sales 10 449 6 950 7 369 The company decided to launch a new performance-based, share-value-based, long-term incentive Hedge accounting plan, LTI Plan 2019–2021, on January 2, 2019. - Related to the hedging of net sales 2 822 11 385 5 723 Distribution of the profit for the financil year 2018 Raute Corporation’s Annual General Meeting was held on April 2, 2019. The Annual General Meering Fair values of forward contracts in foreign currency decided, according to the Board of Directors’ proposal, to distribute a dividend of EUR 1.40 per share Economic hedging to be paid for series A and K shares, a total of EUR 5,968 thousand. The dividend payment date was - Related to financing 2 -61 -35 April 11, 2019. - Related to the hedging of net sales 35 -48 -120 Hedge accounting - Related to the hedging of net sales -79 -458 -200

13 IFRS 16 Vuokrasopimukset Raute on ottanut IFRS 16 -standardin käyttöön 1.1.2019 alkaen. Siirtymäaiheessa on käytetty yksinker- taistettua takautuvaa menetelmää, eikä käyttöönottoa edeltävän vuoden vertailulukuja ole oikaistu.

Raute-konserni on ottanut vuokralle varasto- ja tuotantotiloja liiketoimintansa käyttöön. Standardi- muutoksen käyttöönoton seurauksena osa Raute-konsernin vuokraamien toimitilojen ja tuotantoti- lojen vuokrasopimuksista on kirjattu taseeseen. Vuokrasopimukset, jotka sisältävät oikeuden käyttää vuokrattua hyödykettä, on kirjattu taseen erään Käyttöoikeusomaisuus. Konsernitaseeseen on kirjattu omaisuuserä perustuen omaisuuserän käyttöoikeuteen ja vuokrasopimusvelka perustuen vuokramak- sujen suoritusvelvollisuuteen. Vuokrasopimusvelka on arvostettu niiden vuokrien nykyarvoon, jotka arvostuspäivänä ovat sopimuksen mukaisesti tulevaisuudessa maksettavia ja joita ei ole arvostushet- kellä maksettu. Diskonttauskorkona on käytetty yhtiön lisäluoton korkoa, joka oli siirtymähetkellä 1,0 %. Vuokrasopimusvelasta aiheutuva korko on kirjattu tuloslaskelman erään Rahoituskulut. Vuokraso- pimusvelka sisältyy konsernitaseen erään Korolliset velat. Vuokrasopimuksiin liittyvät käyttöomaisuu- serät poistetaan vuokrasopimuksen voimassaoloajanjakson aikana. Mikäli vuokrasopimus on voimassa toistaiseksi, on sopimusaika määritetty sopimuskohtaisesti.

Mikäli olemassa oleva vuokrasopimus muuttuu tai vuokravelan ja käyttöomaisuusoikeuden laskennassa käytettävät arviot muuttuvat, uudelleenarvostetaan käyttöomaisuuserä ja vuokrasopimusvelka lasken- tahetken mukaisella diskonttokorolla. Mikäli sopimuksen mukainen vuokra on sidottu indeksiin, arvos- tetaan vuokrasopimusvelka ja käyttöomaisuuserä uudelleen vuokranmuutoshetkellä.

Raute-konserni on käyttänyt siirtymähetkellä standardin sisältämät helpotukset, jotka koskevat lyhy- taikaisia vuokrasopimuksia ja arvoltaan vähäisiä omaisuuseriä. Lyhytaikaiset vuokrasopimukset, joiden odotettavissa oleva vuokraoikeus ei ylitä 12 kuukautta, on käsitelty taseen ulkopuolisina vuokravastuina ja näihin vuokrasopimuksiin liittyvät vuokranmaksut on kirjattu kuluiksi tuloslaskelmaan vuokra-ajan mukaisesti. Arvoltaan vähäisten omaisuuserien vuokrasopimuksiin liittyvät vuokrasopimukset on käsi- telty taseen ulkopuolisina vuokravastuina riippumatta siitä, onko sopimus pitkäaikainen vai lyhytaikai- nen. Näihin vuokrasopimuksiin perustuvat käyttövuokrat on kirjattu kuluksi tuloslaskelmaan sopimuksen vuokra-ajan mukaisesti.

Segment information Continuing operations of Raute Group belong to the wood products technology segment. Raute Corporation’s Board of Directors is the chief operating decision maker that is responsible for assigning resources to the operating segment and assessing its result.

Due to Raute’s business model, operational nature and administrative structure, the operational segment to be reported as wood products technology segment is comprised of the whole Group and the information on the segment is consistent with that of the Group. Segment reporting follows the principles of presentation of the consolidated financial statements.

EUR 1 000 30.6.2019 30.6.2018 31.12.2018

Wood products technology Net sales 78 291 78 939 180 993 Operating profit 4 938 5 910 14 922 Assets 91 977 87 988 96 382 Liabilities 46 982 48 874 49 872 Capital expenditure 1 324 2 168 4 384

EUR 1 000 30.6.2019 % 30.6.2018 % 31.12.2018 %

Assets of the wood products technology segment by geographical location Finland 79 604 87 77 358 88 83 494 87 North America 8 095 9 5 847 7 7 850 8 China 2 379 3 3 409 4 3 635 4 Russia 1 496 2 1 067 1 1 038 1 South America 231 0 185 0 224 0 Other 172 0 121 0 141 0 TOTAL 91 977 100 87 988 100 96 382 100

EUR 1 000 30.6.2019 % 30.6.2018 % 31.12.2018 %

Capital expenditure of the wood products technology segment by geographical location Finland 1 224 92 2 079 96 3 508 80 North America 61 5 70 3 707 16 China 22 2 2 0 99 2 Russia 17 1 17 1 46 1 South America - - - - 22 1 Other 1 0 - - 2 0 TOTAL 1 324 100 2 168 100 4 384 100 14 Half-year report January 1–June 30, 2019 July 31, 2019

30.6.2019 30.6.2018 31.12.2018 Exchange rates used in the consolidation of subsidiaries 1.1.– 1.1.– 1.1.– Number of personnel Income statement, euros 30.6.2019 30.6.2018 31.12.2018 Effective, on average, persons 758 705 725 CNY (Chinese juan) 7,6670 7,7100 7,8074 On average, persons 781 732 748 RUB (Russian rouble) 73,7215 71,9802 74,0551 In books at the end of the period, persons 810 778 772 CAD (Canadian dollar) 1,5067 1,5464 1,5302 Personnel working abroad at the end of the period 265 250 267 USD (US dollar) 1,1298 1,2108 1,1815 Personnel working abroad, % 32,7 32,1 34,6 SGD (Singapore dollar) 1,5354 1,6058 1,5928 CLP (Chilean peso) 762,9437 740,4894 757,0688 Pledges on behalf of the company’s management No loans have been granted to the company’s Balance sheet, euros 30.6.2019 30.6.2018 31.12.2018 management. CNY (Chinese juan) 7,8185 7,5512 7,8751 No pledges have been given or other commitments RUB (Russian rouble) 71,5975 73,1582 79,7153 made on behalf of the company’s management and CAD (Canadian dollar) 1,4893 1,5442 1,5605 shareholders. USD (US dollar) 1,1380 1,1658 1,1450 SGD (Singapore dollar) 1,5395 1,5896 1,5591 CLP (Chilean peso) 772,9200 743,9823 795,4900

15 Financial development

FINANCIAL DEVELOPMENT SHARE-RELATED DATA 30.6.2019 30.6.2018 31.12.2018 30.6.2019 30.6.2018 31.12.2018

Change in net sales, % -0,8 10,2 22,2 Earnings per share, (EPS), undiluted, EUR 0,94 1,09 2,78 Exported portion of net sales, % 85,4 88,8 84,6 Earnings per share, (EPS), diluted, EUR 0,94 1,08 2,76 Operating profit, % of net sales 6,3 7,5 8,2 Equity to share, EUR 10,55 9,17 10,82 Return on investment, (ROI), % 20,9 30,6 34,6 Dividend per series A share, EUR - - 1,40 Return on equity, (ROE), % 17,6 23,6 27,6 Dividend per series K share, EUR - - 1,40 Interest-bearing net liabilities, EUR million* -19,3 -25,9 -12,3 Dividend per profit, % - - 50,4 Gearing, %* -42,9 -66,1 -26,4 Effective dividend return, % - 6,6 Equity ratio, %* 63,3 61,5 61,7 - Price/earnings ratio (P/E ratio) - - 7,67 Gross capital expenditure, EUR million 1,3 2,2 4,4 % of net sales 1,7 2,7 2,4 Development in share price (series A shares) Lowest share price for the period, EUR 22,10 26,00 20,50 Research and development costs, EUR million 1,8 1,7 3,7 Highest share price for the period, EUR 28,70 34,90 34,90 % of net sales 2,4 2,2 2,1 Average share price for the period, EUR 25,48 30,35 28,58 Share price at the end of the period, EUR 22,70 31,70 21,30 Order book, EUR million 72 127 95 Order intake, EUR million 58 96 167 Market value of capital stock - Series K shares, EUR million* 22,5 31,4 21,1 *The adoption of IFRS 16 standard has had an impact on the key ratios for the interim reporting period 2019. The figures for the comparison periods have not been restated. - Series A shares, EUR million 74,3 103,7 69,7 Total, EUR million 96,8 135,1 90,8 In addition to IFRS Key ratios, Raute Group publishes some commonly used financial key ratios (alternative performance measures). Calculation of key ratios has been presented in the annual *Series K shares valued at the value of series A shares. financial statements 2018. Trading of the company's shares (series A shares) Trading of shares, pcs 320 657 467 647 879 655 Trading of shares, EUR million 8,2 14,2 25,1

Number of shares - Series K shares, ordinary shares (20 votes/share) 991 161 991 161 991 161 - Series A shares (1 vote/share) 3 272 033 3 272 033 3 272 033 Total 4 263 194 4 263 194 4 263 194

Number of shares, weighted average, 1 000 pcs 4 263 4 256 4 260 Number of shares, diluted, 1 000 pcs 4 299 4 276 4 290

Number of shareholders 5 535 4 722 5 046

16 Development of quarterly results Half-year report January 1–June 30, 2019 July 31, 2019

DEVELOPMENT OF QUARTERLY RESULTS Rolling Rolling Q3 Q4 Q1 Q2 1.7.2018– 1.7.2017– EUR 1 000 2018 2018 2019 2019 30.6.2019 30.6.2018

NET SALES 47 888 54 166 41 309 36 981 180 345 155 355

Change in inventories of finished goods and work in progress 600 -335 890 -1 818 -663 3 559

Other operating income 137 197 112 109 554 335 Materials and services -27 339 -31 996 -23 163 -16 900 -99 398 -85 014 Employee benefits expense -11 316 -12 813 -11 718 -11 152 -46 999 -43 746 Depreciation and amortization -617 -585 -940 -938 -3 080 -2 640 Impairments - -38 -49 -96 -183 - Other operating expenses -3 751 -5 185 -3 842 -3 848 -16 626 -14 765 Total operating expenses -43 024 -50 617 -39 712 -32 933 -166 286 -146 166

OPERATING PROFIT 5 602 3 410 2 599 2 338 13 949 13 084 % of net sales 11,7 6,3 6,3 6,3 7,7 8,4 Financial income 9 40 206 109 365 321 Financial expenses -109 -75 -58 -136 -379 -332 Financial expenses, net -100 -35 148 -27 -14 -11

PROFIT BEFORE TAX 5 502 3 375 2 747 2 311 13 935 13 072 % of net sales 11,5 6,2 6,6 6,3 7,7 8,4 Income taxes -1 189 -480 -612 -424 -2 705 -2 382 PROFIT FOR THE PERIOD 4 313 2 895 2 135 1 887 11 230 10 690 % of net sales 9,0 5,3 5,2 5,1 6,2 6,9 Attributable to Equity holders of the Parent company 4 313 2 895 2 135 1 887 11 230 10 690 Earnings per share, EUR Undiluted earnings per share 1,01 0,68 0,50 0,44 2,63 2,51 Diluted earnings per share 1,01 0,67 0,50 0,44 2,62 2,50 Shares, 1 000 pcs Adjusted average number of shares 4 263 4 263 4 233 4 263 4 263 4 256 Adjusted average number of shares, diluted 4 290 4 294 4 262 4 299 4 299 4 276

Rolling Rolling Q3 Q4 Q1 Q2 1.7.2018– 1.7.2017– FINANCIAL DEVELOPMENT QUARTERLY 2018 2018 2019 2019 30.6.2019 30.6.2018 Order intake during the period, EUR million 42 28 32 26 128 198 Order book at the end of the period, EUR million 121 95 84 72 72 127 17 Shareholders

20 LARGEST SHAREHOLDERS AT JUNE 30, 2019 BY NUMBER OF SHARES 20 LARGEST SHAREHOLDERS AT JUNE 30, 2019 BY NUMBER OF VOTES

Number Number Total % Total % of Number Number Total % Total % of of series of series number of total number of voting of series of series number of total number of voting K shares A shares of shares shares votes rights K shares A shares of shares shares votes rights 1. Sundholm Göran - 500 000 500 000 11,7 500 000 2,2 1. Mustakallio Mika Tapani 62 100 21 170 83 270 2,0 1 263 170 5,5 Mandatum Henkivakuutus- 2. Särkijärvi Anna Riitta 60 480 22 009 82 489 1,9 1 231 609 5,3 2. osakeyhtiö - 138 617 138 617 3,3 138 617 0,6 3. Mustakallio Kari Pauli 60 480 500 60 980 1,4 1 210 100 5,2 3. Laakkonen Mikko Kalervo - 119 919 119 919 2,8 119 919 0,5 4. Kirmo Kaisa Marketta 55 680 48 341 104 021 2,4 1 161 941 5,0 4. Suominen Pekka 48 000 62 429 110 429 2,6 1 022 429 4,4 5. Siivonen Osku Pekka 50 640 53 539 104 179 2,4 1 066 339 4,6 5. Siivonen Osku Pekka 50 640 53 539 104 179 2,4 1 066 339 4,6 6. Suominen Pekka 48 000 62 429 110 429 2,6 1 022 429 4,4 6. Kirmo Kaisa Marketta 55 680 48 341 104 021 2,4 1 161 941 5,0 7. Suominen Tiina Sini-Maria 48 000 52 856 100 856 2,4 1 012 856 4,4 7. Suominen Tiina Sini-Maria 48 000 52 856 100 856 2,4 1 012 856 4,4 8. Mustakallio Ulla Sinikka 47 740 10 730 58 470 1,4 965 530 4,2 8. Keskiaho Kaija Leena 33 600 51 116 84 716 2,0 723 116 3,1 9. Suominen Jussi 48 000 - 48 000 1,1 960 000 4,2 9. Mustakallio Mika Tapani 62 100 21 170 83 270 2,0 1 263 170 5,5 10. Mustakallio Marja Helena 46 740 12 547 59 287 1,4 947 347 4,1 10. Särkijärvi Anna Riitta 60 480 22 009 82 489 1,9 1 231 609 5,3 11. Keskiaho Kaija Leena 33 600 51 116 84 716 2,0 723 116 3,1 11. Mustakallio Kari Pauli 60 480 500 60 980 1,4 1 210 100 5,2 12. Mustakallio Hanna Leena 32 975 5 565 38 540 0,9 665 065 2,9 12. Mustakallio Marja Helena 46 740 12 547 59 287 1,4 947 347 4,1 13. Mustakallio Jukka Jeremias 32 975 - 32 975 0,8 659 500 2,9 13. Mustakallio Ulla Sinikka 47 740 10 730 58 470 1,4 965 530 4,2 14. Keskiaho Vesa Heikki 29 680 - 29 680 0,7 593 600 2,6 14. Särkijärvi Anu Riitta 12 000 43 256 55 256 1,3 283 256 1,2 15. Keskiaho Juha-Pekka 27 880 5 716 33 596 0,8 563 316 2,4 15. Särkijärvi Timo Juha 12 000 43 256 55 256 1,3 283 256 1,2 16. Suominen Jukka Matias 24 960 27 964 52 924 1,2 527 164 2,3 16. Suominen Jukka Matias 24 960 27 964 52 924 1,2 527 164 2,3 17. Keskiaho Ilta Marjaana 24 780 19 094 43 874 1,0 514 694 2,2 Keskinäinen työeläke- 17. vakuutusyhtiö Varma - 51 950 51 950 1,2 51 950 0,2 18. Sundholm Göran - 500 000 500 000 11,7 500 000 2,2 18. Relander Pär-Gustaf - 51 000 51 000 1,2 51 000 0,2 19. Kultanen Leea Annikka 21 595 8 031 29 626 0,7 439 931 1,9 19. Suominen Jussi 48 000 - 48 000 1,1 960 000 4,2 20. Piik Ari 20 855 418 21 273 0,5 417 518 1,8 20. Keskiaho Ilta Marjaana 24 780 19 094 43 874 1,0 514 694 2,2 Total 777 160 902 025 1 679 185 39,4 16 445 225 71,2 Total 635 200 1 330 293 1 965 493 46,1 14 034 293 60,8 MANAGEMENT’S SHAREHOLDING AND NOMINEE-REGISTERED SHARES

Number Number Total % Total % of of series of series number of total number of voting K shares A shares of shares shares votes rights Management’s holding at June 30, 2019 The Board of Directors, The Group's President and CEO and Executive Board* 127 890 131 668 259 558 6,1 2 689 468 11,6 Total 127 890 131 668 259 558 6,1 2 689 468 11,6

*The figures include the holdings of their own, minor children and control entities.

Nominee-registered shares at June 30, 2019 - 145 689 145 689 3,4 145 689 0,6 18 Half-year report January 1–June 30, 2019 July 31, 2019

RAUTE CORPORATION Board of Directors

BRIEFING ON JULY 31, 2019, AT 2 P.M.: A briefing will be organized for analysts, investors and the media on July 31, 2019 at 2 p.m. at Scandic Simonkenttä Hotel, Bulsa-Freda cabinet, Simonkatu 9, Helsinki. The interim report will be presented by Mr. Tapani Kiiski, President and CEO, and Ms. Tarja Järvinen, CFO.

NEXT INTERIM REPORT: Raute Corporation’s interim report January 1–September 30, 2019 will be published on Wednesday, October 30, 2019.

FURTHER INFORMATION: Mr. Tapani Kiiski, President and CEO, Raute Corporation, mobile phone +358 400 814 148 Ms. Tarja Järvinen, Group Vice President, Finance, CFO, Raute Corporation, mobile phone +358 40 658 3562

DISTRIBUTION: Nasdaq Helsinki Ltd, main media, www.raute.com

RAUTE IN BRIEF: Raute is a technology and service company that operates worldwide. Raute’s customers are companies operating in the wood products industry that manufacture veneer, plywood, LVL (Laminated Veneer Lumber) and sawn timber. Its technology offering covers the entire production process for veneer, plywood and LVL and special measurement equipment for sawn timber. As a supplier of mill-scale projects, Raute is a global market leader both in the plywood and LVL industries. Addition- ally, Raute’s full-service concept includes technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute’s head office is located in the Nastola area of Lahti, Finland. The company’s other production plants are located in Kajaani, Finland, the Vancouver area of Canada, the Shanghai area of China and in Pullman, Washington, USA. Raute’s net sales in 2018 were EUR 181.0 million. The Group’s headcount at the end of 2018 was 772. More information about the company can be found at www.raute.com.

19 RAUTE CORPORATION Follow us online: www.raute.com Rautetie 2 Twitter: @rautemachinery, @RauteOyj P.O. Box 69, FI-15551 Nastola, Finland LinkedIn: Raute Oyj Youtube: www.youtube.com/RauteMachinery Tel. +358 3 829 11 Facebook: Raute Corporation Fax +358 3 829 3200 Instagram: @rautecorporation [email protected]